The Austrian Offshore Advantage

This week, I'm writing to you from the departure lounge of the Vienna International Airport.

I lived in Austria from 2003-2005. I returned not only to renew old
friendships, but to see firsthand the latest developments in this small
country, which only a century ago dominated much of Europe.

The airport has changed a great deal in the nearly 10 years since I
left. It's expanded and made itself much more accessible to business
travelers like me.

And Austria itself has changed too. Judging from what I've seen, the
population is remarkably tolerant of cultural and political
differences. Indeed, the most famous Austrian today appears to be a
transvestite who calls herself Conchita Wurst.

But xenophobia is on the rise in Austria (as in much of Europe). The
anti-immigration, rightwing Freedom Party (FPÖ) made big gains in the
2013 elections.

In recent years, immigrants, both legal and otherwise, have
overwhelmed Austria. It's easy for citizens of EU countries to relocate
to, and work in, the country. Thousands of people from the newest EU
members – Romania and Bulgaria – now make their home here.

Yet with continuing illegal immigration from Russia, Libya, and
other countries, this influx has imposed great strains on Austria's
generous social services network. As a result, it's become harder for
"outsiders" without EU passports to obtain residence visas.

In most cases, residence applications from outside the EU are
subject to quotas. And to stay in Austria legally, you must eventually
become proficient in German.

I left Austria in 2005, because I couldn't find a way to qualify for
residence without spending a great deal of money in legal fees. But
every time I return, there's a part of me that wishes I had stayed.

Mercer's, a major human resources consultancy, ranks Austria's
historic capital of Vienna as the world's most livable city. As a former
resident, I can attest to the fact that Vienna is an extraordinarily
attractive place to live – and to visit.

On the evening I arrived last week, I walked from my hotel in the central district to the City Hall (Rathaus).
Every summer evening, weather permitting, musical and theatrical
productions are screened on an open-air video wall in front of this
immense neo-Gothic building. Admission is free, and dozens of food
stalls serve food and drinks. There's nothing like settling in for an
opera screening, accompanied by Wiener Schnitzel and an Ottakringer
beer.

If you qualify, after 10 years of permanent legal and uninterrupted
residence, you can apply for Austrian citizenship and passport. You
must demonstrate fluency in German; pass a test on Austria's history,
constitution, and geography; have a clean criminal record in the
country; and possess a "positive attitude" toward Austria.

Austria also has an accelerated citizenship option in its
immigration law, although it's not a "program," as such. You may qualify
for "instant" Austrian citizenship and passport by performing
extraordinary achievements in the interest of Austria. If you're a
famous scientist, opera singer, or sportsman and relocate to the
country, you may qualify. But most of the handful of individuals
awarded citizenship annually under this option make a hefty
contribution to support or rehabilitate an Austrian cultural, religious,
or historical facility or location – generally in the €2 million
(US$2.7 million) range.

Booming Economy

Austria's official economic forecast predicts the nation's economy
will grow only 2-3% in 2014. But in Vienna, business is booming. Of
course, visiting this city in the midst of tourist season exaggerates
the underlying economic activity. Even beyond the tourism-focused city
center, the signs of growth are everywhere. Vienna recently extended
its U-Bahn (subway) network. One route now extends northwest out to a
new city being built from the ground up: Seestadt, or Lake City. Here,
more than 10,000 new apartments are being built with an estimated
20,000 jobs created.

It makes sense to build on the city outskirts, as land and property
in the center have become very expensive. A real estate magazine in my
hotel room featured dozens of listings in the city center… with a
starting price of €1.9 million. But prices are rising in the suburbs as
well. A friend I met for dinner told me that the apartment he had
purchased in 2005 about six miles outside the city center for €160,000
had nearly doubled in value.

Banking Options for Americans

Austria has also evolved into a sophisticated international banking
center. While Austrian banks don't have as many foreign clients as Swiss
banks, virtually every banking and brokerage service you can imagine
is available. Banks in Austria offer similar services as those in
Switzerland, but at a lower cost and, historically, with a somewhat
lower profile.

Unfortunately, the vast majority of Austrian banks – and non-US
banks in general – no longer deal with Americans. I wrote about the
reasons for this exclusion here.
During my visit to Austria, I met with the two banks in Vienna that I
have confirmed will work with US clients. One of them does so with
reluctance and requires a personal visit – although the minimum
investment is as low as €1,000. The second bank works through a network
of agents – including The Nestmann Group – but requires a minimum
investment of $500,000.

But if you're simply looking for a place to store your valuables –
precious metals, jewelry, etc. – there are opportunities to do so that
are far more accessible to US clients. I met with two private vault
services during my visit that offer affordable, secure, and (in one
case) completely anonymous storage opportunities.

Little Austria has come a long way since the last Soviet soldiers
pulled out in 1955. While it's hardly a tax haven, over the decades,
it's become an extremely attractive place to live, invest, and do
business. If you haven't been here, I highly recommend a visit… and
while you're here, raise a Prost (toast) to this unique country.